IRA Conversion to Roth IRA tax saving strategy

michaeljc70

I do consulting and my income varies. If I have a year where
I don't make very much money, I am thinking about converting
my traditional IRA to a Roth. The reasoning is this: any
taxable part I would have to pay would probably be offset by
my itemized deductions. I could control how much I convert
by only doing enough IRAs (I have multiple) at a time. My
itemized deductions generally run over $30K, regardless of
my income. This seems like a reasonable way to make good on
those deductions in a year when my income isn't high enough
too. Any comments on this strategy? It is basically
legally shifting income to a year where I don't have much.

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Phil Marti

I do consulting and my income varies. If I have a year where
I don't make very much money, I am thinking about converting
my traditional IRA to a Roth. The reasoning is this: any
taxable part I would have to pay would probably be offset by
my itemized deductions. I could control how much I convert
by only doing enough IRAs (I have multiple) at a time. My
itemized deductions generally run over $30K, regardless of
my income. This seems like a reasonable way to make good on
those deductions in a year when my income isn't high enough
too. Any comments on this strategy?

David Woods, EA, ChFC, CLU

I do consulting and my income varies. If I have a year where
I don't make very much money, I am thinking about converting
my traditional IRA to a Roth. The reasoning is this: any
taxable part I would have to pay would probably be offset by
my itemized deductions. I could control how much I convert
by only doing enough IRAs (I have multiple) at a time. My
itemized deductions generally run over $30K, regardless of
my income. This seems like a reasonable way to make good on
those deductions in a year when my income isn't high enough
too. Any comments on this strategy? It is basically
legally shifting income to a year where I don't have much.

Thomas Healy

I do consulting and my income varies. If I have a year where
I don't make very much money, I am thinking about converting
my traditional IRA to a Roth. The reasoning is this: any
taxable part I would have to pay would probably be offset by
my itemized deductions. I could control how much I convert
by only doing enough IRAs (I have multiple) at a time. My
itemized deductions generally run over $30K, regardless of
my income. This seems like a reasonable way to make good on
those deductions in a year when my income isn't high enough
too. Any comments on this strategy? It is basically
legally shifting income to a year where I don't have much.

I recommend this strategy to many of my clients; in fact, it
may pay to convert enough to fill up the 15% bracket. You
can always convert more than enough; if you find you
over-converted, you've got until October 15 to put the
excess back into the IRA. Then, 30 days later, you can take
it out for the next year.

H

Harlan Lunsford

I recommend this strategy to many of my clients; in fact, it
may pay to convert enough to fill up the 15% bracket. You
can always convert more than enough; if you find you
over-converted, you've got until October 15 to put the
excess back into the IRA. Then, 30 days later, you can take
it out for the next year.

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Harlan Lunsford

Great advice and valuable addendum. Especially in Alabama,
where a single person has tax and therefore has to file
when gross is in excess of 1875$! So one could have state
tax on the distribution and no federal tax until over that
threshold 4850+3100. equals... uh... 7950.
Somebody check my math, which was my worst subject in high
school.